History of duty free

A short history of Duty Free…..

The Irish have brought us many pleasures in life, not least Guinness and a fair few good whiskies. Did you know, though, that the Irish are also responsible for duty and tax-free shopping as we know it today. The world’s first airport duty free shop was opened at Shannon Airport by Dr Brendan O’Regan in 1947 to serve trans-Atlantic airline passengers travelling between North America and Europe. Flights would stop at Shannon on both legs to refuel and passengers had time to kill before continuing on their journey. Such a captive audience surely had sales potential! The argument by Dr O’Regan and his team was that, having passed passport control, the passenger had left the country and therefore the duties/taxes of that country became invalid. So everything bought after passport control should be considered as duty-free. The idea was given the go-ahead in Ireland and the shop was an instant success.

In actual fact, diplomats living in embassies (considered as foreign territory), the military and men at sea had enjoyed duty-free allowances for years before the Shannon shop opened its doors. Indeed, liquor had been available to British seamen for onboard consumption since the 1500s. In the 19th Century ships passengers were also allowed to purchase supplies without duty and were able to enter the country/countries they were visiting or returning to without paying import duties on items they had bought during their voyage. In the main, of course, these items were liquor and tobacco • products purchased for the journey (remember in olden days even short journeys could take weeks) • while perfumes started to be sold onboard ships most probably so that the people on these crowded vessels smelt a bit better.

In 1944 this right was extended to passengers on international flights • but it was Dr O’Regan who brought the concept of duty free into the airport itself and in 1954 international agreements on allowances were agreed in the New York Convention on International Travel. At this time Customs were still fairly anti the concept of ground shops being allowed to sell duty free to travellers and initially orders had to be taken landside (eg before passport control) and then the goods would be delivered in sealed bags to passengers at the Gate as they boarded. This method of sale is still used in the USA. In 1959 Customs & Excise in the UK finally allowed duty-free shops airside, initially just for liquor sales; it was not til 1964 that tobacco, perfume and other gifts could also be sold after passport control.

The 1960s really saw airport shopping start to develop, helped in no small part by two American entrepreneurs: Charles (Chuck) Feeney and Robert Miller who together started what is known as DFS (Duty Free Shops) one of the world’s largest and most influential retailers. DFS first started operating in Hong Kong and over the years has expanded globally. In the early 1960s DFS scored a coup by gaining the exclusive concession for duty free sales in Hawaii which enabled the company to target Japanese travellers. Massive airport and aircraft development since the 1970s, combined with reduced air fares, has seen an incredible increase in passenger traffic • millions of people travelling on business and pleasure, and all keen to shop! Bigger and bigger terminals have been developed with ever increasing space for ‘non-aeronautical’ revenues such as food, beverage and • or course • duty and tax free shopping.

And as for those Irish…well that shop in Shannon still operates today (though you would hardly recognise it compared to the original) and wherever you travel in the world there’s likely to be Irish influence somewhere in the country’s duty and tax-free business!